Commitments and Contingent Liabilities

NVR is committed under multiple non-cancelable operating leases involving office space, model homes, production facilities, automobiles and equipment. Future minimum lease payments under these operating leases as of December 31, 2018 are as follows:



Year Ending December 31,
2019	$	31,564
2020	22,210
2021	17,331
2022	13,667
2023	10,324
Thereafter	12,607
	107,703
Sublease income	(25		)
	$	107,678

Total rent expense incurred under operating leases was approximately $52,900, $49,400 and $45,800 for the years ended December 31, 2018, 2017 and 2016, respectively.

The Company generally does not engage in the land development business. Instead, the Company typically acquires finished building lots at market prices from various development entities under Lot Purchase Agreements. The Lot Purchase Agreements require deposits that may be forfeited if the Company fails to perform under the agreement. The deposits required under the Lot Purchase Agreements are in the form of cash or letters of credit in varying amounts, and typically range up to 10% of the aggregate purchase price of the finished lots. At December 31, 2018, assuming that contractual development milestones are met and the Company exercises its option, the Company expects to place additional forfeitable deposits with land developers under existing Lot Purchase Agreements of approximately $193,600. The Company also has one specific performance contract pursuant to which the Company is committed to purchase 10 finished lots at an aggregate purchase price of approximately $1,505. Additionally, as of December 31, 2018, we had funding commitments totaling approximately $7,300 under a joint development agreement related to our land under development, a portion of which we expect will be offset by development credits of approximately $4,600.

During the ordinary course of operating the homebuilding and mortgage banking businesses, the Company is required to enter into bond or letter of credit arrangements with local municipalities, government agencies, or land developers to collateralize its obligations under various contracts. The Company had approximately $37,600 of contingent obligations under such agreements, including approximately $9,000 for letters of credit issued under the Credit Agreement as of December 31, 2018. The Company believes it will fulfill its obligations under the related contracts and does not anticipate any material losses under these bonds or letters of credit.

The following table reflects the changes in the Company’s warranty reserve (see Note 1 herein for further discussion of warranty/product liability reserves):



	Year Ended December 31,
	2018			2017			2016
Warranty reserve, beginning of year	$	94,513		$	93,895		$	87,407
Provision	62,553			44,652			50,787
Payments	(53,366		)	(44,034		)	(44,299		)
Warranty reserve, end of year	$	103,700		$	94,513		$	93,895

The Company and its subsidiaries are also involved in various other litigation arising in the ordinary course of business. In the opinion of management, and based on advice of legal counsel, this litigation is not expected to have a material adverse effect on the financial position, results of operations or cash flows of the Company. Legal costs incurred in connection with outstanding litigation are expensed as incurred.